One of the oldest truisms agriculture offers is the simple, rock-solid advice that the time to close the barn door is before the cows get out. Closing the door afterward, as everyone knows, is pointless because the cows are already long gone.
Everyone, except of course, the United States Congress which, in September, hosted a Senate judiciary committee hearing on “consolidation and competition in the U.S. seed and agrochemical industry.” It arrived just one week after Bayer announced its $66 billion buyout of Monsanto.
A better time to have had a congressional hearing on Big Agbiz competition would have been a year ago before the world’s re-maining seven agri-chemical cows began to pair off and leave the barn.
First out the door last December were DuPont and Dow in what they described as a “merger of equals” — as if anything worth US$130 billion has an equal.
Next went Syngenta and ChemChina who locked horns, then eyes, in February for $43 billion.
Then, in mid-September, Mon-santo finally allowed Bayer to take the lead and out the door they went, head-to-tail, into the brave new world of what Diana Moss of the American Antitrust Institute calls the “Big 4”—Bayer-Monsanto, Dow-DuPont, ChemChina-Syngenta, and, last and truly least, BASF.
Together those formerly seven, now just four, firms have a virtual stranglehold on the global ag-chemical market, combining for $67 billion in sales (2014 figures). Two of the biggest, however, Bayer-Monsanto and Dow-DuPont, command 70 percent of the world market, Moss said in Senate testimony Sept. 20.
If any of Moss’s worrisome antitrust numbers troubled the hearing’s participating senators and panelists, most whistled right past that graveyard to get to their promised land — how American corporate taxes are too high, its regulations too heavy, and its overall business climate too spiteful for any company to survive long in this beloved, star-bangled land.
Several senators at the judiciary hearing attempted to link today’s ag-chem merger fever with an American tax code filled with what they see as anti-corporation potholes.
Time and again, however, when asked directly about uncompetitive American corporate taxes as a key factor in the moves, company officials explained that their deals were not based on any kind of tax manoeuvres.
The direct, straight-up replies made no difference; the senators weren’t after answers. They were after votes.
In amongst all this sudden Capitol Hill antitrust concern, some facts did emerge. Moss, the only antitrust expert invited to the hearing, explained how the two giants of these deals, Bayer-Monsanto and Dow-DuPont, “are likely to adversely affect competition in three ways.”
“First, they will eliminate head-to-head competition in markets for certain crop seed and chemicals,” she said.
Next, these marriages will “eliminate competition in agricultural biotechnology innovation markets and reduce opportunities for pro-competitive … collaborations.”
And, finally, “the combinations would create substantial vertical integration between traits, seeds and chemicals.” These “platforms” will likely not “interoperate” with rival products.
All this evidence, testified Moss, points to “less innovation, higher agricultural input prices and less choice for farmers, and higher food prices for consumers” if these deals go through.
Overwhelming odds favour just that, though; nothing was said in the Senate hearing to indicate even a hint of a hurdle for any of them.
Which leaves just you and me with the perfectly pointless job of closing the barn door.
Alan Guebert is an Illinois-based agricultural commentator.